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This Week’s Outsourcing Scan 6-22-2015

Update: Upcoming Outsourcing Issues. June 22, 2015

1) National/Illinois: Corruption scandal hits the Chicago parking meters deal. LAZ Parking, one of the largest privatizers of municipal parking assets and operations, fires a senior executive who has been under federal investigation for bribery in Chicago. “The FBI is investigating whether the former executive was paid $90,000 in bribes to steer a contract to install and maintain privatized parking meters in Chicago. The company, based in Hartford, said it learned of the allegations Tuesday and placed the vice president on administrative leave as it conducted its investigation.” (…) The alleged kickback scheme was laid out in an FBI search warrant affidavit filed in February seeking access to two email accounts tied to the LAZ executive. LAZ had been hired by a Morgan Stanley-led business consortium in 2008 to manage the privatized meters in Chicago. According to the 17-page filing that was made public recently, the LAZ executive met with the president and CEO of another firm, identified only as Company A, at a Florida restaurant in late 2008, as the city’s much-maligned $1.2 billion deal to lease the meters for 75 years was being finalized.”

2) National: The American Prospect takes a close look at the fight for union representation at charter schools. “Secky Fascione, NEA’s director of organizing, says that as more charter teachers began approaching her union, the NEA started to see them as educators who should be treated no differently from anyone else. [AFT and NEA] also recognized that such new national initiatives as the Common Core standards and President Obama’s Race for the Top meant that teachers at charter and traditional public schools faced similar challenges that the unions could help them address.”

3) National: Alex Friedmann of Prison Legal News reports on deaths at Corrections Corporation of America-operated immigration detention facilities. “Based on data collected by Prison Legal News, over the 11-year period from 2004 to June 2015 there have been 32 deaths reported at CCA-operated immigration detention facilities nationwide. Fourteen of those deaths occurred at Eloy, while seven were at the company’s Houston Processing Center. The San Diego Correctional Facility reported five deaths, and two occurred at both CCA’s Stewart Detention Center in Georgia and Elizabeth Detention Center in New Jersey. One death each was reported at the Laredo Processing Center in Texas and the North Georgia Detention Center. Most of the detainee deaths were related to medical issues but at least seven were found to be suicides – or over 20% of the deaths at CCA-operated immigration detention facilities.”

4) National: The Washington Post’s Valerie Strauss shines a light on Phil McRae’s critical analysis of “blended learning,” a favorite of school privatization advocates and ed tech corporations. McRae writes, “in the mythical space of blended learning, class sizes apparently no longer matter and new staffing patterns begin to emerge. The amount of time students spend in schools becomes irrelevant as brick-and-mortar structures fade away. However, this myth disregards the overwhelming parental desire and societal expectation that children and youth will gather together to learn in highly relational settings with knowledgeable and mindful professionals (teachers) who understand both the art and science of learning.”

5) National: Serco, the controversial security company, has been lobbying Democratic staffers and ICE officials to try to obtain federal contracts for immigrant detention. “Migrants’ rights advocates who have seen the Serco briefing paper dismissed the model as simply ‘dressing up’ the system that is already in place. Congressional sources told the Guardian that representatives from Serco have met with staffers of at least two House Democrats, 136 of whom have recently signed a letter addressed to the homeland security secretary, Jeh Johnson, calling for an end to all family detention.”

Serco recently paid Bluestone Strategies $60,000 to lobby Congress and HHS using Bluestone’s Chris Long (a former legislative assistant to Buddy Darden) and Behrends Foster (former chief of staff to Dave Camp).

6) Florida: The Tampa Bay Times warns that “Hillsborough County is poised to hand over its probation operations to a controversial California company with a history of legal disputes.” It reports, “the agreement was scheduled for a vote at last Wednesday’s county board meeting, but was postponed until July 15 after the Tampa Bay Times wrote about Sentinel’s background. If approved, Hillsborough County would enter a contentious national debate over the privatization of probation—a practice that has drawn criticism from human rights organizations and led to costly legal battles in other states.”

7) Georgia: Atlanta taxpayers are to spend over $500,000 to build a new road because public roads are being cut off due to a “public private partnership” deal between the city and filmmaker Tyler Perry Studios. The deal has been heavily pushed by Atlanta Mayor Kasim Reed, and has attracted sharp criticism for a lack of public input and allegedly bogus job creation claims.

8) Indiana: Finger pointing begins in the wake of the collapse of the Indianapolis courthouse “public private partnership” deal, with P3 promoters claiming the city-county council approved the procurement method and opponents saying they were not let in on the details and never signed off on it. “‘[Council] President Lewis only signed an MOU [Memorandum of Understanding] that stated the city and county should look into a new facility and also explore responsible ways to finance it. She never gave her approval to finance via P3. The administration made that decision unilaterally,’ [Council CFO Bart] Brown commented. As for his participation in selecting the winning team, Brown responded: ‘I was part of the financial review team but was not privy to the RFP [Request for Proposals] until a week prior to submission.’” Three bidding teams are now claiming $750,000 payments. [Sub required]

9) Iowa: In a letter to the editor of the Des Moines Register, Duane Mortensen of Ankeny criticizes “the Republican obsession with privatization of basic government programs.” He writes, “if there are inefficiencies in these programs, then just fix them. Maybe we should get rid of the governor and just hire a state management company.”

10) Louisiana: Tensions escalate between LSU and the for-profit organization managing its Shreveport hospital, and may lead to a breach of contract lawsuit. “The foundation took control of LSU’s Shreveport and Monroe hospitals in October 2013, as part of Jindal’s push to privatize most of the university-run public hospital system. BRF had never run a patient care facility when it got the no-bid contract. Financial documents took nearly a year to complete. LSU sent a collection letter demanding millions in payments during the dispute. The foundation accused LSU of mismanaging its clinics. University Health’s CEO abruptly resigned in March. An outside consulting firm hired by LSU officials has said the privatization deal for the Shreveport hospital has created such management and financial tensions that it threatens the health of the university’s nearby medical school.”

11) Massachusetts: Fitchburg city council rejects outsourcing janitorial services to Aramark. “After [a Fitchburg Education Association (NEA)] protest at a School Committee meeting, and a City Council discussion last week where several councilors voiced their opposition to privatization, [Superintendent] Ravenelle recommended reappropriating funds and keeping the custodial services as public school employees.”

12) Michigan: The Ann Arbor public schools may privatize their grounds operations and lay off 13 workers. The board will vote on the proposal this Wednesday.

13) Michigan: The Negaunee School Board considered but put off a plan to outsource food services after receiving only one bid. ‘I was very pleased tonight that the Negaunee School Board is concerned about employees losing their jobs, about bringing in a private contractor we don’t know much about in,’ said Stuart Skauge from the Michigan Education Association. ‘I don’t think we’re totally out of the woods on privatization for food service in Negaunee, but we’re OK for this coming year.’”

14) New Hampshire: The Parker-Varney school district issues an RFP for food services. “This, of course, is not the first time the district has flirted with privatizing the $5.5 million food service program, which has seen a dramatic drop in revenue from food sales in recent years. In 2011, board members visited Lowell, Mass., where Aramark—the city’s beloved custodial contractor—handles the school meal program. In the end, the board resisted privatizing the program. With qualifications requiring a vendor to have at least three years doing business with school districts, the district’s RFP would seem to favor a large established contractor like Aramark.” Responses are due July 6.

15) New York: Finances are looking up at the Valley View nursing home in Goshen, which County Executive Steven Neuhaus has fought to privatize. “When a few years ago people were running it into the ground and telling us it would cost $30 million to the taxpayers, today we find out it’s not $30 million, it’s a couple of million and it actually costs more to get rid of it than to keep it so we are saving taxpayer money and we are providing a great service,” says County legislature Health and Mental Health Committee Chairman Michael Anagnostakis.

16) New York: New Rochelle hires LAZ Parking for a 10-year contract to manage its parking machines. “I think this would streamline the process for many people,” said Deputy Commissioner of Buildings and Parking Paul Vacca.

17) Pennsylvania: The Philadelphia School Reform Commission approves the first of two plans to privatize the jobs of school workers. Source4Teachers will get a $34 million contract to manage substitute staffing for two years. The commission also wants to outsource school nurses’ jobs. “‘Once again, the School Reform Commission is using the budget crisis as an excuse to privatize public education, one position at a time,’ said PFT president Jerry Jordan in a statement yesterday following the vote. He added that the union is considering filing an Unfair Labor Practice against the district.”

18) Utah: The final public comment meeting of the Prison Relocation Commission was held last week and drew a large crowd. “The Legislature tasked the commission with recommending a new site, but most in attendance took the commission to task over its mission and its tactics. ‘While renovation is warranted, relocation is a luxury we simply cannot afford. This relocation is simply a way to privatize profits, and socialize expenses,’ one woman told the commission members.”

19) Virginia: The state is adopting a new “data driven” scoring system to decide on road projects, whether they are procured by traditional funding methods or “public private partnerships.” The criteria will be safety, congestion, accessibility, economic development, environmental quality, and land use.” The system was approved by the legislature after a number of politically driven, ill conceived and costly projects—such as the US 460 “public private partnership”—were pushed through by the previous Republican administration.

20) Washington: Construction company executive Barry Baker wants to privatize workers compensation. “We’re one of two states that can’t privatize its insurance. I think that’s something that has to happen.”

21) Wisconsin: Retired teacher Sheila Plotkin speaks out for the value of public education, on which liberty and justice have been based: “The movement to privatize education is not new. For 25 years, I have watched as children, parents, teachers and communities were told to do more and more with less and less. The devastating economic results of this refusal to invest can be seen in rural, urban and increasingly in suburban communities.”

22) International: Tens of thousands protest against austerity and privatization in the United Kingdom. “Marching under the banner End Austerity Now, protesters denounced public sector cuts, the treatment of the disabled and the vulnerable through welfare cuts, and the privatization of the [National Health Service]. Teachers, nurses, lawyers and union groups marched under their own banners.”

23) International: The European Bank for Reconstruction and Development held a seminar in London last week to discuss the difficult market for “public private partnerships” in developing countries. The seminar coincided with the launching of the “PPP Knowledge Lab—a ‘curated, comprehensive and easy-to-use online resource on public-private partnerships’ which the EBRD helped to develop.” Concerns included “too many projects are ill-conceived, badly structured and end up being cancelled (…) Collectively, what the points made above add up to is the sense that emerging market PPPs are simply more trouble than they’re worth.” [Sub required]

24) International: Louis-Philippe Rochon, an associate professor at Laurentian University and co-editor of the Review of Keynesian Economics, warns against the use of “Social Impact Bonds.” He lists “five problems with SIBs,” including: “one of the underlying assumptions of SIBs is that the private sector is somehow more efficient than the public sector, and therefore would naturally offer the same services for less, thereby saving taxpayers some of their hard-earned income. Empirical research just does not support this claim; the evidence on whether the private sector is more efficient than the government is at best inconclusive. Yet the myth survives.”

25) International: Pope Francis speaks out against water privatization.

26) Revolving Door News: Quentin Messer, a leader in Louisiana’s economic development agency, who “worked in K-12 education overhaul for several years,” is hired as chief of the New Orleans Business Alliance. Messer formerly was with White Hat Management, the controversial charter school operator, and has supported Democrats for Educational Reform.

Legislative Issues:

1) National: House Transportation and Infrastructure chair Bill Shuster rolls out a plan to privatize air traffic control. “After examining various models, I believe we need to establish a federally chartered, fully independent, not-for-profit corporation to operate and modernize our ATC services.”

2) National: The Senate Finance Committee will be holding a hearing this Thursday on financing options to replenish the Highway Trust Fund, “with a focus on how states are working with the private sector.” Witnesses include the pro-privatization Mitch Daniels (who negotiated the Indiana toll road deal) and Shailen P. Bhatt, Executive Director, Colorado Department of Transportation.

3) National: Senators Booker and Wicker introduce legislation to fund Amtrak operations and improvements. The bill calls for spending approximately $1.65 billion annually over the next four years on the rail service, and $570 million per year on rail grants. “The funding has become controversial in recent years, however, as some Republicans have pushed to eliminate the subsidies and privatize Amtrak’s most profitable routes.”

3) California: Sen. Mark Leno introduces a bill to limit the authority of trial courts to privatize services previously performed by public employees. A hearing will be held on the bill tomorrow. The bill is supported by, among others, AFSCME, Laborers’ Locals 777 and 792, SEIU and the California Official Court Reporters Association. [SB 682]

4) Illinois: Gov. Rauner launches political ads funded by himself and real estate mogul Sam Zell, attacking Democrats for not backing his legislative agenda, including a bid to privatize parts of the state’s economic development department. “In the House, lawmakers spent hours grilling administration officials over the DCEO privatization plan. Democrats said they will consider the idea if the law will automatically expire in the future, forcing a legislative review of whether the privatization plan is working. The Rauner administration has argued that businesses will reject Illinois if incentives offered through the initiative have a chance of expiring in a couple of years.”

5) Indiana: As revenue shortfalls at the privatized Hoosier Lottery attract increasing concern, the Journal-Gazette reviews the recent rocky history of Indiana privatizations. “Private contractors perform numerous jobs for state government every day, efficiently and effectively. But grand claims always demand great scrutiny. State officials have been too eager in recent years to buy into bold promises from charter school operators, lottery companies, financiers and others whose loyalty is not to Hoosiers, but to the bottom line. As voters prepare for 2016 elections, they would be wise to consider the mixed results of Indiana’s privatization push.”

6) Michigan: Lawmakers introduce a package of bills to tighten up accountability for privatized public services and permit public employees to bid on the work. “Together, the bills would require state agencies to go beyond comparing the cost of a potential contract against the cost of providing the services in-house. Agencies would also have to study how outsourcing would affect local communities and their agricultural and manufacturing industries, how state coffers might be affected by laid off workers seeking public assistance, and how local areas’ tax revenues might be affected.”

7) Pennsylvania: As the June 30 budget deadline looms, Republicans resurrect their plan to privatize liquor sales and sell off the state’s liquor stores to raise quick cash. Democratic Governor Tom Wolf is locked in tough negotiations with GOP leaders, and wants to use modernization of the liquor system to generate revenue. Meanwhile, “the Center for Alcohol Policy held two panel discussions in Harrisburg Wednesday to discuss the public health and safety aspects of alcohol regulation as well as the economic impact of Pennsylvania’s alcohol industry.”

8) Texas: Lawmakers approve extra funding for foster care overhaul, but critics say the process is still being rushed. “The moves came 10 months after the state put the redesign on hold when the contractor over the launch of the program in west and north Texas abruptly pulled out amid financial issues. Child advocates, who have been critical of redesign, praised the new funding and oversight, but said the Legislature still was moving too fast on the overhaul.”